An institutional analysis of the emergence and institutionalisation of Islamic banking practices in Indonesia

Abstract

Purpose The purpose of this paper is to explore the purposeful actions of key actors who corroborated the emergence and institutionalisation of Islamic banking practices in Indonesia. Design/methodology/approach A documentary analysis approach is used in the paper, with the analysis being guided by insights from institutional work perspectives. Findings The emergence and institutionalisation of Islamic banking practices were influenced significantly by the changing dynamics of the institutional field and the social and political context in Indonesia, especially the Islamic revival in the 1980s and later on the political accommodation of Islam. These were then leveraged by various key actors through their institutional works. These actors, with their own specific roles, worked independently and later on together to establish Islamic banking practices in Indonesia. The findings also show the shifting priorities of the actors from compliance with religious edicts to promoting avenues for Muslim participation in economic activities. Research limitations/implications This paper is mainly based on documentary data; hence, the findings would be richer with primary data. Originality/value This research provides further understanding of how the Islamic banking idea can be pursued through the specific work of certain actors.

Objectives and measures of performance of Islamic microfinance banks in Indonesia: the stakeholders' perspectives

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“…The supervisors and regulators' focus on profit and growth as the key measures of IMFBs' performance is due to their concern regarding the sustainability of the banks. This concern is understandable in view of the poor financial performance of BPRS in Indonesia over the last few decades compared to their conventional counterparts (Siti-Nabiha and Adib, 2020). Even in terms of non-financial measures, such as the number of branches and customer base, BPRS' performance is still deemed unsatisfactory.…”

Islamic banks’ Sharia compliance disclosure: an international evidence

“…Although there are claims that IBs simply imitate conventional banks institutional settings and practices (Haniffa and Hudaib, 2010), the IBs operational and disclosure practice can be viewed as being distinctive with IBs employing different methods of financing, only considering activities that are interest free and embracing risk sharing (Siti-Nabiha and Adib, 2020). Hampel et al (2017) asserted that institutions can be a social pattern in one country but not in others.…”